We have always been told since childhood that we should save money because it guarantees you financially stable life and helps us in rainy days. We all have been hearing those Money Saving Tips while growing up. But all this conventional wisdom fails when it comes to the real life of today’s era. Yes!Saving was a good idea at least half a century ago but not today. Here is why;
1- No Backup
In 1971,Richard Nixon;President of the United States of America took US Dollar off the gold standard. And after this decision,Dollar was not money anymore. It became a currency. Because it has no value backed up by gold or any other commodity which is actual wealth or money. We keep on saving Dollars,yens,Pounds or Rupees for years and years without realising that what we have is just a pile of useless papers.
2- Decreasing In Value
Venezuela is a country boasting the world’s largest oil reserves. When Hugo Chavez was elected president in December 1998, he promised to tackle corruption and poverty.
He used Venezuela’s rapidly growing oil wealth to set up social programmes, known as the Misiones, with the aim of eradicating poverty and reducing inequality. It was, many claimed, a much-needed intervention in the entrenched disparity between Venezuela’s rich and poor.
As Chavez strived to transform the nation with what he called 21st century socialism, his populist policies began to take a more radical turn. He nationalised industries and bloated state bureaucracy at great national expense, all funded by high oil prices and unchecked borrowing. Venezuela became saddled with record-high levels of debt.
By the time of his death in March 2013, Chavez handed over both the reins of power to his handpicked successor, Nicolas Maduro, as well as the poisoned chalice of an economy about to implode.
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The IMF states that in 2018, the Venezuelan economy contracted by 15 percent, and inflation reached 13,000 percent. It means that the same dollar which was worthy of 1 Venezuelan bolívar before this situation was now worthy of 13000 Venezuelan bolívars.
Inflation happens when government prints more money to meet up its expenses or cope up debts. By printing more money,they dont bake a new cake. They just cut some more pieces of cake. Cutting cake in more pieces doesn’t satisfy your hunger. In order to satisfy your hunger,you need to bake more cake. But governments decide to cut cake in more pieces instead and distribute them.
You keep on saving money for years by using all those
Money Saving Tips you have learnt for years and years and don’t even realize that your money is same in quantity but losing its value. If the inflation rate in your country is 10%,it means that if you keep 100 dollars for 1 year,they would still be 100 dollars in quantity but their value will be equal to 90 dollars.
“Venezuelans today cannot eat. You see people eating from the garbage,” says Professor Margarita Lopez Maya, Central University of Venezuela.
3- No Control
Before 2000 BC,people used to save money in their own strongholds. But then people started looking for a way to keep or manage their money with less hustle and to solve this problem of wealthy people,first bank was established in the city of Babylon.
From then,people have been using banks to save their money. Have you ever thought what happens when you deposit your money in a bank for years and years? Does it always stay there in banks’s locker? Of course not.
Your money is a liability for banks and they dont want to take this headache of taking care of your money for pennies. So what they do is take money from their clients,ensure its security and return and invest this money into different ventures.
You earn money,save it in a bank and think that you have full control over your money but the reality is that you have no control over your money. its your bank who controls your money,takes risk on it and make big money and what you get is pennies as an annual interest.
4- Middle Class Mindset
Always worried about saving money and looking for
Money Saving Tips makes you live with middle class mindset for your whole life. You are always unable to get rid of it. For whole of your life,you are always checking for prices and worried about saving money. You never get to ximum potential
The biggest set back of middle class mindset is that your never make valuable investment in yourself. You are always worried about price of a book you want to read,audio program you want to buy,training course/workshop you want to go to although you know that it can change your life but you still choose not to by or go just because the price is a little bit high.
Its an understood thing that without investing in yourself,you can’t improve your lifestyle. But a person with a middle class mindset will always prefer price over value. What he needs is a lower price. Value of product or service he wants to use or buy is not his first concern.
5- Money Slavery
Those who are always worried about saving money,fall prey to money. They become slaves of money for a lifetime. They will spend 2 hours to travel a couple of miles by walking just to save a couple of bucks instead of spending that time on increasing their income,they ll waste that time on saving money. That’s how,slowly and steadily this habit makes you a money slave.
As we have discussed all aspects of saving money,it is clear that Savers Are Losers. Those who keep on saving money,dont realize that they are actually losing money.